Scott Morrison said his "preliminary view" was that the deal to sell S. Kidman and Co to Dakang Australia Holdings was "contrary to the national interest".

Earlier in April, Dakang lodged a $370 million bid to buy the company.

It came after Mr Morrison rejected an initial bid for Kidman by a related Chinese company, Pengxin Group.

The consortium had revised the deal to exclude Kidman's largest property, Anna Creek, in South Australia, which is located in a weapons testing range.

"Given the size and significance of the Kidman portfolio, I am concerned that the acquisition of an 80 per cent interest in S. Kidman and Co Limited by Dakang Austarlia Holdings may be contrary to the national interest," Mr Morrison said.

On Friday Mr Morrison said there was still "significant domestic interest" in the company.

"I have concerns that the form in which the Kidman portfolio has been offered as a single aggregated asset, has rendered it difficult for Australian bidders to be able to make a competitive bid," he said.

"The size of the asset makes it difficult for any single Australian group to acquire the entire operation."

The decision is not an outright rejection and Dakang has until May 3 to respond.

Dakang said it was carefully considering Mr Morrison's announcement.

Kidman managing director 'disappointed and deflated'

Kidman managing director Greg Campbell told the ABC he was "very disappointed and deflated" by the Treasurer's decision.

He said the board had recommended Dakang Australia's $370 million offer for the majority of Kidman's outback cattle stations after an "arduous" international search for the best buyer.

The board will spend the next few days talking to Dakang Australia and its Australian partner, as well as Kidman shareholders, Mr Morrison, and the Foreign Investment Review Board, to try to find a way forward.

"The Treasurer has the liberty to say 'no' to such investments and in this case he's said 'no' with some right of reply, and I'm sure our bidders will be looking at that," Mr Campbell told the ABC.

The board and its preferred buyer are trying to work out whether a differently-structured, foreign-lead bid would meet with Mr Morrison's approval.

Mr Campbell said "the door was always open" for prospective Australian buyers, but "in our case, the Australian buyers didn't come anywhere near the pricing of the foreign parties".

"Our preferred buyer is a syndicate of buyers, both foreign and Australian, and there were no reasons why Australians couldn't have similarly syndicated, but they didn't," he said.

"In the end, we were left with only foreign bids to consider."

Chinese investors growing increasingly 'frustrated' with Australia

"Foreign investment is part of the fabric, it's not new, it's not something to be afraid of and our experience is that it adds to rural economies," chief executive of the Northern Territory Cattlemen's Association Tracey Hayes said.

"Australia has been actively out there in foreign markets courting foreign investment, so from my perspective [the] announcement sends a confusing signal to that market.

"The Kidman group of properties have been for sale for quite some time now and local investors have had every opportunity to participate."

An expert on Chinese agribusiness and trade said Australia risks frustrating foreign investors.

"From a Chinese perspective it probably doesn't send a great message," he said.

"I know in the recent Australia Week in China, around the investor round forum, there were one or two Chinese investors that did say that consistency from the Australian Government would be highly desirable.

"The [Australian] Government could argue that they're being clear in knocking it back but it does send a message around sovereign risk back to China, which is unusual; normally we're talking about China as a sovereign risk from an Australian trading perspective."

In her resignation from politics, Kelly O'Dwyer said she feared another miscarriage in Canberra, far from home. Her announcement is shocking for more than just party-political reasons, writes Emma A. Jane.